Are you prepared for the possibility of being too old to hire and too young to retire?
Over the past five years, the Employee Benefit Research Institute's Retirement Confidence Survey (to download the survey, click here) has shown that between 45 percent and 50 percent of retirees leave the workforce earlier than planned.
The American Society on Aging, meanwhile, found that 45 percent of unemployed 55- to 64-year-olds were reported as unemployed long-term (i.e., 27 weeks or longer) versus 33 percent of 25- to 34-year-olds.
"It's definitely a fact of life," said Richard Colarossi, a certified financial planner with Colarossi & Williams Financial Advisory Group. "It's devastating."
Several of his clients received million-dollar buyout packages, Colarossi said, which seemed attractive at first but then presented problems.
"One client in his mid-50s, who had worked for 30 years, said, 'I'll never save that kind of money,' so he took the package," Colarossi said. "But it sets up a dilemma because he's trying and trying, but he can't find a new job.
"Therefore, he has to start dipping into his buyout money — which is not enough for him to retire at this age," he added. "Think about it: He'll need to pay medical benefits, taxes, mortgage, tuition for his college-age kids. He's spending his future."
Another of Colarossi's clients, in his early 60s, had been in upper management and enjoying a lifestyle with much discretionary income. Unable to find a similar-level position, he feels his only option is to move from the metropolitan New York area to one of the southern states.
These client situations have only reinforced Colarossi's planning approach. "My mentality has always been [that] you're never secure enough," he said.
Beth Blecker, CEO of Eastern Planning, has seen about 10 clients involuntarily displaced from their jobs in the past several years. In response, they have downsized their homes, moved away to less-expensive, southern states, done consulting or taken much lower-paying jobs and delayed retirement to age 68 or 70.
"I think people are being smarter now," Blecker said. "They're saving more now and starting to assume that this is a good opportunity for saving, not spending.
"My 40- and 50-[year-old] clients are generally better savers than the 60-year-olds, who lived through the go-go '90s,' she said, adding that that later decade "gave them false hope that the stock market was always going to go up, along with real estate values and the economy."
For Blecker, the "too old to hire, too young to retire" scenario underscores the importance of always staying on top of one's education and staying up to date in one's field. "No more complacency," she said.
Physical therapist Harriet Surdi was able to meet her unemployment challenges by not being complacent — professionally or financially. Surdi had a private physical therapy practice with her husband for 20 years in New York. By 2006 they became priced out of the expensive urban rental market and had to close the practice.
Starting over again in her 50s, Surdi made a conscious decision to use her age as an asset and to develop specializations in Pilates and physical therapy for elderly patients. Her broad expertise, high skill level and adaptability made her attractive to hire, and she has worked steadily for the past 10 years at elder-care facilities. She also has a private part-time Pilates rehab practice, which includes cutting-edge techniques.
"I feel I can continue to be actively engaged, because I invested in my health and fitness," Surdi said. "It helps me relate to my clients."
"Working is the new retirement," she added. "It's impossible to retire in this economy, what with inflation, taxes and low returns on savings."
Similarly, when Jean Valentine lost her job of 25 years in the commercial printing industry back in 2011, she was being let go from an industry that had been made obsolete by the digital age.
Although Valentine was willing to learn a new skill, "it seemed no one wanted to train a 56-year-old cancer survivor who would probably retire in a few years," she said.
She worked at odd jobs for several years until picking up a part-time job at a library. The story sounds bleak until Valentine mentions that, at the time of the layoff, she and her husband had just paid off their mortgage and replaced all their old appliances. Aggressively frugal and defensive in their financial decisions, they had eschewed credit cards for the past 15 years.
In 1995 she purchased an inexpensive supplemental insurance policy for cancer coverage. Ten years later she contracted a virulent strain of breast cancer. "Without the policy, we would have been devastated financially," Valentine said.
The couple's longtime defensiveness paid off, as they are able to live off their part-time incomes (Valentine's husband was downsized, too).
Lesson learned? "Be prepared," she said. "Don't expect the horrible, but you can negate the impact by living within your means."
— By Deborah Nason, special to CNBC.com